- Amazon is expected to spend $6 billion on employee stock awards in the second quarter, up 66% from last year — both record highs.
- The increase is largely due to wage inflation and the competitive labor market, Amazon’s CFO Brian Olsavsky said during Thursday’s earnings call.
- Amazon has been grappling with high turnover and complaints of low pay in recent years.
Amazon is giving employees a record amount of stock awards in an effort to retain corporate workers amid high inflation and a competitive labor market.
During the second quarter alone, which ends in June, Amazon is on pace to spend a record $6 billion on stock-based compensation expenses, the company’s CFO, Brian Olsavsky, said during Amazon’s most recent earnings call on Thursday. That’s the highest quarterly amount ever spent on employee stock awards, and a record 66% jump from the same period last year, according to company filings.
Amazon’s compensation, like many tech companies, typically consists of a combination of cash base pay and stock awards. But Amazon’s flat stock price in recent years reduced the upside potential in pay, prompting many frustrated employees to consider other job offers, as Insider previously reported.
Olsavsky blamed record inflation and a competitive labor market for the company’s decision to increase stock grants. He also pointed to a “seasonal step-up” because most Amazon employees receive their annual restricted stock unit grants in the second quarter.
Even accounting for that, the increase is staggering: Amazon has never spent more than $3.7 billion in quarterly employee stock awards, and this quarter’s estimate is nearly double the $3.2 billion it spent in the previous quarter.
“We expect to see stock-based compensation expense of approximately $6 billion, up from $3.3 billion in Q1, largely reflecting wage inflation as we continue to hire and retain employees in high-demand areas, including engineers and other tech workers,” Olsavsky said during the call.
Amazon’s spokesperson confirmed the record figures, but declined to provide a statement for this story.
Mark Mahaney, senior managing director at Evercore, told Insider the change is a “pretty big indicator of aggressive wage inflation” across the board. The nearly $3 billion increase in employee stock awards from last quarter was one of the main reasons why Amazon’s second quarter operating income outlook fell way below Wall Street estimates on Thursday.
“It’s a surprisingly big number,” Mahaney said.
Amazon stock is down almost 12% following Thursday’s earnings report that showed slowing demand and growth. The company highlighted incremental costs of $6 billion related to inflation, productivity loss, and excess capacity. Those costs will drop to about $4 billion in the second quarter, the company predicted.
The mammoth growth in employee stock awards comes at a time when Amazon is grappling with severe employee turnover across its corporate workforce. A combination of Amazon’s comparatively low base pay, its stagnating stock price, and a reputation for a grueling workplace has led to a huge spike in employee departures in the past year, with some teams reporting a whopping 35% attrition rate. At least 50 vice presidents left Amazon last year, a more-than-10% turnover rate at that level, according to Insider’s analysis.
To address some of those concerns, Amazon more than doubled its max base pay to $350,000, while expanding the pay band for many roles this year. Some employees saw up to a 90% pay increase this year, though not everyone is happy with their new salary, with some seeing single-digit raises, as Insider previously reported.
Do you work at Amazon? Got a tip?
Contact reporter Eugene Kim via the encrypted messaging apps Signal or Telegram (+1-650-942-3061) or email (firstname.lastname@example.org).